Job Market Toughest for New Entrants

Even with the recent improvement in the job market, it’s a tough time to be looking for work. It’s even tougher if you’re just entering the work force.

Jonathan James, an economist at the Federal Reserve Bank of Cleveland, took a look at unemployment among young workers, and it’s not a pretty picture. The unemployment rate among workers aged 20-24 is over 13%, versus 8.3% for the population at large.

The job woes aren’t evenly distributed, Mr. James notes. Men in their 20s have a significantly higher rate of unemployment than women of the same age, 14.2% vs. 12.3%. Even more striking is the effect of education: More than a fifth of 20-something men with just a high school diploma are unemployed. Among men with at least some college, the number is just one in ten.

A decade ago, a young man without a college degree would likely have gone into construction, and might have made a decent living doing so. That hasn’t been an option since the housing bust. The decline in the construction sector accounts for two-thirds in the decline in employment for 20-something men with just a high school diploma.

For young people trying to find work — both men and women — the scars of their early-career unemployment could last a lifetime. Mr. James notes that the early years of a career are meant to be a critical period for developing new skills, advancing up the job ladder and boosting earnings. On average, Mr. James says, two-thirds of lifetime wage growth come in the first 10 years of a person’s career. Millions of unemployed young people are missing out on those opportunities.

“Even if these jobs return, the effects of the recession during these formative years in what otherwise would have been a period of skill formation and productivity growth may continue to be felt throughout their careers,” Mr. James writes.

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